NEW YORK, June 16 (Reuters) - The tables have quickly turned
on AK Steel.

After losing its bid for National Steel Corp. (OTC BB:NSTLB.OB - News) when rival United
States Steel Corp. (NYSE:X - News) secured a crucial pact
with the steelworkers union in April, AK Steel Holding Corp. (NYSE:AKS - News) is now seen by industry
watchers as a potential takeover target.

AK Steel's shares are a "pretty good value", said Derek Dobecki, an
analyst at Ironwood Capital Management, which owned about 1.5 million
shares of the steelmaker at the end of March, according to Thomson
Financial ShareWatch.

The failed acquisition attempt, as well as the effects of pension costs
and cheap imports, have driven AK Steel's stock price down to historically
low levels of about $3 per share. US Steel, by comparison, is trading for
nearly $17 per share.

Before making its first bid for National in January, AK Steel's shares
were trading at $7.60.

Longbow Research analyst Chris Olin said the company could be
attractive to foreign investors looking for a beachhead in the U.S. steel
market.

"It's a great entry point (for a foreign steel maker) because you get
the large automotive exposure," Olin said. He said another bonus would be
AK Steel's excess capacity to process semifinished steel, noting that a
buyer could ship its extra product to be completed in AK's mills.

ThyssenKrupp said it was not interested in AK Steel, noting that it is
looking to expand in the United States, but not on the production side.
U.S. Steel and Arcelor declined to comment, and CST was not available for
comment.

AK Steel declined to comment on its strategy.

MORE COMPETITIVE ENVIRONMENT FOR AK STEEL?

AK Steel has reported two straight quarterly losses due to
industry-wide problems, including weak demand and surging retiree health
care and pension costs, known as "legacy costs."

Analysts expect AK's losses to continue through the third quarter of
2004, despite its reputation as a low-cost operator and its place as a
market leader in operating profit per ton of steel since 1994.

Labor issues have become increasingly important in an industry in which
more than 30 steel makers have filed for bankruptcy protection since 1997.

Many of the firm's competitors have secured new contracts with the
United Steelworkers of America (News
- Websites).
However, AK Steel has an acrimonious relationship with the union, partly
because of a three-year lockout of USWA workers at an Ohio plant, which
ended in December.

Some analysts have questioned AK Steel's ability to compete now that
International Steel Group and U.S. Steel, both larger than AK, have
lowered labor costs.

But others think AK has advantages over larger players.

"They've got some preestablished relationships that make them a 'most
favored nation' supplier. So, I don't think they will necessarily get
bulldozed tomorrow," said Lawrence Creatura, a portfolio manger at Clover
Capital Management.

Creatura said AK Steel has more advanced technology and makes very high
quality steel. Clover owned about 1.2 million shares of AK Steel at the
end of March, according to ShareWatch.